HP - Earnings call transcript Q3 2024 | Helmerich & Payne, Inc.

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Operator

Good day, everyone, and welcome to today's Helmerich & Payne's Fiscal Third Quarter Earnings and Acquisition of KCA Deutag Call. [Operator Instructions] And as a reminder, today's call is being recorded.

It is now my pleasure to turn the conference over to Dave Wilson, Vice President, Investor Relations. Please go ahead, sir.

Dave Wilson

Thank you, Connie, and welcome, everyone, to Helmerich & Payne's conference call and webcast to discuss the acquisition of KCA Deutag and the company's results for the third fiscal quarter of year 2024.

John President and and are Smith, and today Vice Senior CFO. us Lindsay, CEO; President Mark With

The acquisition agenda some and KCA opportunities for that outlook provide follows. our financial the Both an our third the for call it this generates. and company's our will then Mark And the questions. our the discussing John will prepared our conclude significant morning creation the Then benefits approach Mark overview planning. discuss fourth finally, of we'll growth be that, to call will results value of Deutag after open and by sharing will quarter for brief plan. quarter. deleveraging integration on John comments and and is then John then the as with And remarks transaction

current we that everyone are defined the I'll future securities begin laws. statements not performance. as guarantees and this of are call on and remarks, our statements as Before include forward-looking of this under information remind Such date management's expectations prepared will based

uncertainties assumptions Forward-looking certain risks, predict. and statements to that are involve difficult

As actual materially. such, differ outcomes and results our could

more on Report Form Form our our these can on on about other XX-Q quarterly Annual reports SEC our You XX-K, and filings. learn risks

place should You forward-looking not undertake to and we statements. no forward-looking obligation statements, undue reliance on these publicly update

net free statistics. flow, non-GAAP such operating segment as cash direct to and measures operating to financial also may make EBITDA, certain reference We operating income, operating margin, other debt EBITDA

measures acquisition release for You'll other the in of yesterday's the find margin earnings press direct non-GAAP and reconciliation presentation. definitions the accompanying and release the and GAAP definition in

the of be website. that you release supplement information along Those the Relations the to will have and call. press Investor follow to comments. with the recommend acquisition posted that handy Mark's we slides those and John this documents the presentation on And discussed regarding We portion

I'll the over John. call With that to turn said,

John Lindsay

us we this day on afternoon, to financial of you fiscal And Deutag. everyone. acquisition announced short our our for and I joining results morning, Yesterday we announced appreciate XXXX. Dave, you, good Thank KCA notice. quarter third

merger offshore this strategy international manufacturing energy believe exposure, earnings, scale and East, diversified management transformational accelerates services. our We and world-class in contract KCA the provides provides and and growth with Middle immediate is

going allow But on I'd for to fiscal Mark highlights on before the and more minutes earnings any and quarter spend also for the like provide into fiscal details acquisition, to few QX our the a financial QX. outlook

America relatively of result the our We value sizable our our during During XXXX, and strong the active H&P's in quarter believe North despite our rig It count quarter. remained decline also the customers. in on this performance, remains count, notable particularly overall strategy to of delivered unyielding stable we Solutions operating rig resilience the financial is fiscal focus segment. of third demonstrating more industry the providing the that

in industry the From gas influences a that recent bring discipline is that believe it said, steadier return ushered this And also the invested a has prioritizing for a time. has on accompanied over That we slower driving positive while capital in principle. growth. a by operating been will more prices outlook the activity environment, predominant about macro become capital business. to cyclical, in and Oil and oil prominent always been industry. driver have on used have a gas and years as and the perspective, governor in be X Today, act

own. return encourage reliability. their higher as as contracting efficiency win-win customers efforts our to operational customer well earnings Another for focus with customers, and meshes models H&P's strategy a drive and commercial important our delivers that consolidation influence shareholders and is our and our well

of a but people through are market, prevalent remains job good in doing churn managing Contractual our U.S. this. the

flat anticipate continue, the to our perhaps with summers, modest also in a seen fiscal into year-end. to we we be our have expect recent heading improvement count as and churn active We rig

the fiscal comparable are in be international our the with of in to first of strategy marking are rigs step expected Those a with international Arabia arrived major X the addition quarter, fourth once to region. Saudi FlexRig the Saudi those contractual quarter are super-spec the Activity third during segment exception Arabia, increase in quarter the company's acceptance the levels the operational expected to work the commence first rigs. presence fiscal our in front, of procedures fourth completed. On in the

Saudi the is to with for a forward and long-term progressing with with balance work planned the working rigs preparation Aramco We're expected as remaining our the The super-spec through looking export dates building relationship year. X of customer. calendar new

turn to to highlights. call to going the I'm now financial over review Mark And the QX

Mark Smith

third XXXX John. our quarter quarter XXXX the fiscal results I fourth Today appropriate, year will for guidance and full [indiscernible] and fiscal on operating financial the highlight as remaining position. comment Thanks,

for recently with XX. Let highlights ended completed third the me start fiscal quarter June

in The due start-up consolidated to increased, to costs the primarily were higher North revenues segment America. up Saudi primarily direct expenses Total the expected sequential pricing for direct company's costs. were operating improved average attributable in sequentially, international

$XX as which -- and than to million in our of $X due quarter, and a for were to fees approximately related professional select consulting nonrecurring approximately third KCA Deutag yesterday. a was expectations release administrative million the our significant item General expenses noted the services acquisition, earnings higher which as was

million operations for free $XX generated from approximately deducting when position remarks. will capital flow cash flow later supplemental company's cash in of address the was $XX basis $XXX the cash $XXX company I million. million, of and and these expenditures dividend, the quarter million Third

churn, averaged from America in The focus active Turning primarily fiscal and Solutions due for quarter. within second declined late during We but value increased remained the in guided customers. delivered range the to million, quarter to economics sequentially XXX our between sustaining the due Revenues XXX of by contract contracted continual XXX, rig third on to to which count $X was the our XXX. XXX rigs down quarter, our with segments, beginning North the segment.

the $XX,XXX $XX,XXX vary per to the recent range compared third day the were general day $XX,XXX. up Total previous segment to as $XX,XXX with in general our within This expenses of quarter-to-quarter is slightly quarter, to quarter. daily per in expectations expenses

ahead quarter fourth for rigs was of XXX fiscal of and quarter flat, have America we today's said. through of the Looking contracted, we third as call, 'XX relatively most as the activity North Solutions, to

between As our we rigs stated end last we that call, and continue during working. fiscal quarter approaching rig signs the expect quarter And is see we leveling-off to XXX count April point. to the with XXX fourth a

decrease market share. U.S. Despite this even calendar total accrete maintain rig count and a we in to industry continue year,

relatively day revenue We and expect to pricing average per remain to continue flat.

flat the in quarter remain relatively as We well. to fourth costs expect

remain International fiscal look of with the Saudi in release, the we mentioned Solutions fourth as international expected fourth segment, the most press Next, rig Arabia quarter to initial activity of as operations quarter. to to fiscal expect the before commence end the unchanged, we the 'XX,

recommissioning rig $X fiscal million of million slipped recommissioning third up mentioned Saudi to million in into now $X April expense the $X $X call expected the in that Note quarter fourth million from quarter, quarter to is to million. the Saudi fourth revised expenses the from final Arabia therefore, $X

original around to guidance full fiscal be as me full our the range, million. appropriate. expected XXXX $XXX end for expenditures of year still are at Let fiscal the top Capital update year

are the this spend that $XX $XX We total be organic international at previously XX% Our XXXX. on expansion fiscal [indiscernible] opportunities, XXXX would to future which approximately expected fiscal 'XX uncertain incurred primarily total million million stated $XXX be international CapEx XXXX million, spend time. of is in Any international fiscal capital CapEx. of further would which dependent is in this

to Depreciation of from completion to for is due created excess accelerated conversion via [indiscernible] slightly year the program. related depreciation fiscal 'XX the full capital walking [indiscernible] rig revised for

fees the expectations expenses million Our guidance increase revised to range the previously of million. mentioned and is year professional Deutag due and for acquisition. from previous are services fiscal to related up general KCA $XXX for the to This administrative full consulting $XXX

development for rig and revised fiscal quarter to to in costs the Research due million technologies. $XX third to XXXX automation related million floor from are onetime expenditure $XX a up

back at financial an approximately of and our at in XX. note, June looking equivalent H&P investments of we March million any trailing XX-month limited versus fiscal XXXX, share quarter. cash buyback QX, times $XXX short-term hand on XX, were average Of levels within the our to Deutag a at per even we for and amount Now cash though repurchased at $XXX below fiscal the had buy million KCA values contemplated shares in not did transaction. QX, preserve Instead, shares position. we sought

million this of we capital plan, towards expenditures, to are quarter this and results date. the cover this supplemental have and year, $XX we cash fiscal XXXX the fiscal flow year's base another generating for our the final allocated dividend, Further, projections on this fiscal dividend repurchases investments. year, Based various to long-horizon the share quarter's ample

That concludes fiscal the our regarding third prepared quarter. comments

John the Deutag to to our discuss turn now me Let call KCA back acquisition.

John Lindsay

Mark. you, Thank

Mark Deutag said, We're begin to going on Slide As we're X. transaction. KCA the going cover to

So in H&P. you presentation historic have day you. It hopefully, is the for a of exciting front and deck

onshore Our the a our acquisition international objective establishes and strategic is company. in major KCA of drilling a and leader delivering Deutag H&P global accelerates transformative expansion, as on for

and has Deutag transaction and more company, to little share. KCA free more existing visibility greater resilient flow flow cash a is operations. very larger, be earnings accretive per with expected diversified H&P flow highly a overlap become immediately and generation. will This both complementary to cash to H&P's cash geographic assets footprint and having

taking a thoughtful and for in approach and strengthens the and acquisition company to come. to the of We investing further continues managed have history business. years legacy that a running This many

conservative approach cornerstone Being company financially this has our of a business. a been to

post-close our credit plan to such, clear promptly rating. and we delever maintain a As expect have to investment-grade

balanced continue company allocation long focus the future. shareholder history capital and on The a has returns, taking this sustainable providing a a will to of with also into approach

will and the support As Deutag on employees, customer-centric a integration. seamless priorities shares cultural focused a and safety values KCA sustainability, approach. of well-being remain our These you'll hear and today, will

in highlights, X, key the it transaction. you for provide of details turn the to summarizes we billion approximately If Slide acquiring are $X.XX KCA Deutag cash. To

and in cover the primarily financing fund We moment. debt, with Mark will a will details new

worth overall benefits, the the of I've already but highlighted transaction. of nature reiterating accretive key some this financial it's

We the conditions to prior subject to transaction to close customary approvals. closing year-end, XXXX expect regulatory calendar and

Many a of is Europe in KCA in to familiar Middle operations and Deutag KCA brief but introduction America, drilling diverse East, company presence global about Based us land Deutag, with is you most U.K., X KCA Africa. a excites the the South and be a and in drilling may significant this opportunity. Slide additional what with

of operations approximately years of XXX and over network has a XX,XXX KCA employees. global experience supported by

transaction aspect East and countries One that its land excites XX% EBITDA us the company's drilling operations. from about in core contract generated total offshore XXXX nearly really Middle operating its is was this in that of operations services

very of generation. resources and they So concentrated have cash revenue flow

of its roughly Oman XX% generated operating EBITDA XX% by approximately generation. In Saudi was East Middle which total, generated XXXX EBITDA, revenue cash rigs concentration KCA's XXXX again operating core Kuwait, land located operations XX countries of Arabia, of highlights total its and those in flow and and of

business. of contracts, management The offshore XX their XX% Angola, Deutag's company The offshore from business overlap. little generated complementary Sea, is provides another backlog customers, primarily on the and major located offshore KCA operating business operations, highly land its to This a and in offshore another KCA stability. Canada. long-term of North business very involves asset-light Azerbaijan with source also rigs earnings with Like robust visibility super management has Deutag EBITDA which contract platform ours

has well-established opportunity [indiscernible] industry, business transition a important in and We Finally, efforts business the Saudi segment Oman. exposure comprises for drilling then businesses, providing to KCA [indiscernible] company, upside energy a hubs and in growth manufacturer. facilities represents Europe. longer-term energy This and Arabia one Deutag's engineering including Germany, the this in X manufacturing believe serving

is U.S. H&P. our measured to market in more Slide the they the super-spec was the be customers more we U.S. at rig time X. likely evolving the turning right transaction in market here the past. in advent the capital-disciplined becoming Now would in growth Shortly after opportunities their This businesses, the were that right of U.S. than for the realized and and

strategy was continued even look concerted interrupted more then, in a internationally. Middle by expand we the we result, As the East. but a international opportunities, COVID pandemic, This to developed particularly for to

but right financial this for time, growth found position years, recent We around KCA part monitoring it assets As East reducing organic external portfolio debt, leadership various quite has its the have world also for opportunities international of operations. some some in been this strategy, generated Saipem geographically, its believe streamlined with the fit. looking we've we by Deutag KCA significantly the In Middle have acquiring enhanced its strengthened acquisition. of by Onshore and

and U.S. The X. Middle gas-producing Slide East regions to are the prominent Turning most and the in oil world. X

East. be said, And you the big want be if to the want big the core Permian. to to We rig This that globally, East. providers replicate in in transaction Middle Middle you in the you larger making gives organically, H&P U.S., would be immediate be be to way a challenging you in markets in often of have have scale H&P Middle the if East to in have one

Slide the comparison rigs demand to in to that and East Brent oil. projected for on X, Moving price in the shows the Middle historical of historic

rather I've as discussed, East transaction continued are rate coming but the strong represents view This resilient the As in people annually we operations processes. just reason quality years acquiring not than through executing market assets, transaction at see an XXXX. for at the time. this this is with more estimated and another expected Middle only We growth to acquiring is X% compelling

We H&P's means are excited about future. for what this

now benefits turn over Mark to financial acquisition. of the the will to I this call discuss And

Mark Smith

It is scale John. across operational The Thanks, markets. acquisition international the a it our our geographic and mix and strengthens increases win-win. U.S. and

As EBITDA past operating increase over months, from approximately delivered of X, of billion than company XX a on on would a basis. XX% combined an more stand-alone Slide shown H&P basis, have on the the $X.X

We will a business. more much also diversified have

from we stand-alone a basis this land pro approximately on forma approximately EBITDA. to grow a approximately expected year international basis operations a X% And XX% transaction XXXX calendar to are basis on grow operating on X% pro For stand-alone expect a example, operations to from forma basis. on our offshore will approximately on X%

basis, business. legacy operating EBITDA and our pro international combined X/X So come about will U.S. creating operations, on of forma diversification a the company's from offshore from onshore a

H&P better have geographical result, earnings a As and streams. balance in flow will cash

customers. of and supported ExxonMobil XX, backlog well including Looking $X.X Deutag visibility key Deutag NOCs $X.X $X.X also KCA large, adds This cash approximately we by which international KCA billion markets. will of of stability $X.X optioned. well-known to stronger a is which billion H&P's of as as for is work includes work billion have of billion, firm robust Shell, and approximately at blue-chip Slide backlog approximately customers flow in BP, and for contract

and to Slide accretive to cash is It The accretive all financial metrics. to on as and XXXX. free immediately from with type. by free cash this accretion flow is this of Moving thereafter, is transaction cost XXXX, expected the is exceed flow per key frame as expected transaction of a to typical capital soon accretive our share for returns what XX. cash increasingly are that double-digit Furthermore, time flow transactions shorter than

transaction. synergies for opportunities a the XXXX, believe large economic despite run are realize by procurement considering These a strategic We not geographic to in and primarily a savings. the anticipated time. overlap, $XX reduction we factor synergies approximately little rationale overhead there in Additionally, rate by and for expect were when over additional synergies million and driven

are East the multiple of approximately synergies, than trading transaction companies. multiples public KCA acquiring Including of other is This much X.Xx. a Middle lower we Deutag peer at

also it seen and this balanced and details balance history to delever Slide for our including a financial of oil transaction. to term discipline invest purposeful natural to gas take it sheet advantage but in post-closing. markets. committed despite a XX plans opportunities, to us We is allows investor prompt the the often H&P's for and returns. market volatility the transformative remain allows Two, of One, crude twofold. conservative plan long very and move maintaining us

are we opportunity. our For international a to increase meaningful leverage this KCA of Deutag growth to willing advantage temporarily acquisition, take

years to our reduction capital a grade priority maintain investment be X will X rating. for expect We post-close. Debt to

and positioned We at prepayable and expect the Deutag existing flows, refinance staggered will be of strong a with utilizing KCA lower by promptly debt capital, cost to we debt also term well to issued bonds newly reduce loans maturities. cash projected

long-term a to the or focused long-term will from we in transaction. net with financial close our to history, benefits X.Xx are near at of stewardship below debt term to our a Xx. on realize focus Our be to this ratio operating significant EBITDA Consistent target of reducing

This both creation us XX. Slide long-term to improves Turning and for near- enabling volatility, value our while reducing deliver to returns also shareholders. transaction

maintain long-standing allocation commitment our provide capital priorities shareholder and We to will returns.

final XXXX will we the and of pay XXXX. dividend fourth June declared the fiscal installment that We X, supplemental on

anticipate supplemental not period. do a providing we Thereafter, near-term during dividend deleveraging the

We do averages. industry and intend base to expect share. of to competitive remain the And maintain dividend the current yield with $X annual per industry we

near strong the debt including we further to opportunities. work reduce -- with U.S. target will opportunities we continue As profile, investment to rig to select return in term, export select

beyond consider also close. first to the following opportunistic additional years shareholders will base of through returns the couple We dividend

With turn the I'll over John. call to that, back

John Lindsay

Thanks, core a wrap discussing by today up values high common and Mark. I'll our our at comments plans level. integration prepared

XX. to emphasizes Slide serve An complementary safe. how our and important has financial businesses turn H&P, safety, keep our a sustainability whether our is you aspect KCA employees customer-centric in If of we we cultures, Deutag and operational similar that Like our approach customers or excellence. how

Together, shared to across to forward KCA to value global Deutag's talented look and these markets. H&P, to we on working our exceptional employees provide values will we customers performance as build welcoming together

Moving XX. to Slide

ground integration will Our similar planning. cultures our

will customers. our continuing to We execution approach support on a measured focusing and take

include together, plan a we companies assets opportunities and use identifying will strengths, areas local company's and knowledge. focus. few enhancing companies, of our KCA's each geographic to footprint, As to with leveraging both operations we existing These optimizing have bring our expertise of our

previously, we Solutions Solutions, manufacturing Offshore Other X opportunity Solutions. we this. Deutag's believe But this H&P an falls mentioned under there primary operating is will have to KCA [indiscernible] business Post-close, on engineering grow America North and and segments: as International slide.

America remain segment will Solutions unchanged. For modeling H&P's your North purposes,

through are this and XX, summarizing Slide to what acquisition. Turning creating we

KCA about excited future Deutag. with are H&P's We

of operations XXX-plus-year a global leading a legacy driller. on land building companies are with combined to We successful create

will will centers to culture We in and on and that strong we have foster our innovation offshore technology And services a asset-light communities. and engineering. continue people

best firmly the yet I to is come. believe

Before presentation, Slide we outlining the up with that we get slide strategic for wrap we'll the to today's the call this first the shared XX. in on rationale Q&A, transaction

it hopefully company. As long-term we for and acquisition Deutag for you've H&P, a and attractive is believe the benefits transformative KCA heard, important offers

H&P's I their their work, and thank excellence. employees of all dedication for want their commitment to to hard

our drive chapter. You continue have next and in made possible announcement today's to this will you success

I look Deutag and value deliver working shareholders, to to H&P closely and forward drive strong together to our and welcoming growth the KCA for team partners. customers

concludes for you remarks. that be Now to have happy our that Connie, Thank prepared to remaining. answer the your going some with time attention. your we're we of And questions,

Operator

[Operator question Pant. our we'll Instructions] from And Saurabh take first

Saurabh Pant

John, Mark, sure. exciting transaction for

U.S.-listed side start Deutag with better and Eastern Let on of versus what views the -- give slide Middle organization drives me on agree multiples, bear You in lot KCA Eastern just more assets. appreciate on company, Middle right? than John, I the It's But one credit the at U.S. what investors opportunity including East to with that appreciate that for you an multiple. Middle not and Mark, being higher assets. of high-level you the business investors totally way the drillers? you're right? things, side, the acquiring trade much It's drives stocks U.S. a that, any acquiring, mean, the are right? I paid X.Xx, But synergies on right, showed you drillers, a to

John Lindsay

a bit. didn't do good with we little I multiple opportunities and about all Saurabh, we up and ahead. broke But are outlook the of your feel where you Yes. just the catch the question,

H&P having that growth and been about access the in concentration for a past transformational large really As we've East, land that strategy think, years. deal it for X is rig And really said, -- the talking a international and we've Middle beneficial. that is I for accelerates this

Mark Smith

especially of just Yes, multiple. companies presences, to multiple KCA would the view Deutag's the of it with the at for characteristics Well, OFS it current in market to have how carry Saurabh, to thinking Middle we implied relative stream, visibility lot higher prepared East in I seen with years. remarks, significant favorably, cash recent in of compare our cycles. it? is about couple historical other the a multiples of companies to more I the mentioned valuation of And are U.S.-centric tend listed add, several a premium trading flow and that what within backlog, when volatility we The we higher is resiliency

KCA and which East Middle replicate, the within challenging attractiveness. region scale, Finally, the to quite its is to frankly, size contributes

Saurabh Pant

the course, time combined quick the one a of on this deleveraging Right, going the how think thinking close sense. How about the should right. your And entity, of cash that we target, as in But at about right? depends down from to it you line you Mark, one about are Absolutely. that? Xx. flow makes from point That Of then free terms right? X.X talked line You generate on? time maybe

Mark Smith

believe a We've capital Saurabh. transient near-term the is comments, as Thanks, debt to historically. years this prepared level low I've a will post-close. we be allocation maintained always priority And X X in said for Debt reduction, increase.

be reducing below. a longer-term to to will X.Xx of the Xx sector we that closed EBITDA like in where oilfield operate contract at or drilling services Our sort focus coverage from

We sight through provides last a said, to that resilient have longer-term plans blue-chip base by customer cycles. contracts, line as about volatility talked robust I in backlog I the of less question, revenues, your very KCA's supported deleveraging, for just and intentional

Saurabh Pant

one And right. your legacy Right, U.S. business. if I the on follow-up, quick may, just unrelated side, then

uptick overall that market more moving So the think bit? say count let's towards think, -- opportunity a that high-grading slight that up end John, to Is on it the point? increase starts positive increase just of rig can move to you with is do customers Or comment this H&P little really it's bottoming rigs? an there the you at to a year. see you driving signs fiscal your potential of what's

John Lindsay

probably as look I opportunities are both. forward. some combination a There high-grade think it's of we

said we're see improved before, activity there's budgets But to there's at in our improvement that into calendar we an as I real there. But the it's hearing some we our that far usually our our we've these win-win is the then, what out very opportunities year, a really, in have the we and customers. there people hard as year, with reset and going as performance of But customers. see end and is the think and fundamentally. that's course, always new outlook And seeing course, advance. of driver with and talk of

Operator

And we'll Keith question take our next from MacKey, RBC.

Keith MacKey

I to you outside is, first is how jurisdictions, of now, this -- question first, footprint I you the U.S.? guess well of about do the East, a think lot other really Are guess, you a amount rigs might the much Middle set change particularly think this you've the like now in about does gained over pretty as now of larger your moving there?

John Lindsay

really work, an specifically we been internationally, that provides of Keith, I because really more even a and before, merger have we the in KCA the this thinking rigs and have history They the the footprint in about has. obviously, of would think export than Deutag opportunity long have that what Middle exposure to East. us experience

of there's think opportunities less sure a as it as there. So I I would I it more. lot opportunity. don't see see

Mark Smith

in and have that idle super-spec between reminding we rigs Just U.S. XX XX the

Keith MacKey

Absolutely.

up Just free accretion. on cash to follow the flow

of push pretty to tend be always find to seem that next creep is acquire targets. when in tends companies accretion I What costs to and out some others, So that there year. those more strong

well free maybe year flow So going why next and that can some won't you why not here. as give But is the accretion to in reasoning hand? your to case double-digit confidence cash that's happen saying be or us

Mark Smith

Yes.

ways, We have unlevered said, this looks The looked from -- transaction be is different at stand-alone including the it business. you transaction to as simple many accretive.

exceeding transaction of XXXX, a return is a quick as transaction accretion year, size And this my have next as We expected flow double-digit for experience by result. of soon cost just capital XXXX. is which cash in really

people, of long all We sites, had had at had feel of confident. a of We've are a We've really months confident. a substantial many lot and aspects due of access business, pretty diligence. this. the review we look We've to

synergies little improvements from have from many overlap and complementary the have have again, leveraging don't reductions across do fleet. our in very geographic some we said, I but with XXXX expect -- procurement overhead some we we to businesses, still global As by

Operator

from next David take we'll Pickering our question Smith, And Partners. Energy

David Smith

your Congratulations how point entry costs. know being think is international the replicate, do think on appetite other about maybe for the question, To society Mark's assuming should And pro with this following scale been you the about company's that how into part the deal. about your size on startup long to your geographies, process and FlexRigs? market to hurdle a potential FlexRigs KCA the tough earlier relationship? forma But some ability I establishing we to has of Keith's introduce real

John Lindsay

In Well, David, think coverage great have. with that cases, that just it's experience obviously, a don't question. H&P. the don't some and the have that of nature that sheer relationships We they experience the I do we the same and have same exposure.

just think opportunities. opens up some definition, by I And that so

of think and is additional other that to customers that unconventional international great just have a to additional expansion. us even merger an the resource for as mean, creates And see we to I think I exposure think I that this for plays. more opportunity I countries. continue opportunity much

I provides upside. it think us do So

David Smith

there ask you And did mention a but appreciate missed percentage I what I approach U.S. early think sorry to contract curious follow-up, it. if are could it. you it's U.S.? to performance-based if activity But of performance outside take I I if contracts? opportunities know the is the And your ask, on

Mark Smith

we and in customer base, churn to some we've for of Bahrain many occurred. been quarter, quarter-on-quarter slows, fleet fact, some first once as is, consolidation reasons that the have, experienced the settles our your activity the quarter churn that again to fiscal is including performance various countries. E&P of rig the be around performance a Gulf the that we have the XX% contract consistent in in believe We contract, point, percentage. And in to the calendar little we in as that's increase and it fourth of Coast 'XX, a David, and do expect, first start-up

Operator

our Becker, next Doug question And One. we'll Capital take from

Doug Becker

Congratulations.

run the growth. terms the rate In of certainly, highlighting we're slide deck,

in off capital Just of base curious invested base. and of of about your and contemplated X.XX the return growth rate what's on accretion that that [ metrics, off prospects some run ]

Mark Smith

note, of question, work on Deutag here, you the Saipem And occur year. acquisition closings, lot believe, did in actually not will which company as great XX/XX/XXXX David. its towards staggered based portion Argentina, Saipem back had EBITDA, of one a America, had is finished of for That's KCA just A 'XX. of acquisition our I many that half until and XXXX the various -- a this Latin

we since that with invest the number. And that type opportunities exports there we opportunity legacy to in existing which the the growth throughout is EBITDA is XX/XX/XXXX they conventional that we So some not been last there just about talked the believe rig there KCA H&P believe Deutag's growth work drilling. primarily has do footprint onshore that of but today, to further of analyst, for related only are

Doug Becker

just encouraging. with sounds and them due certainly general customers? what what assessment, see In the the Aramco diligence was in perception with process, relationship you It or KCA your Deutag's market, the was

John Lindsay

reputation. an KCA has Deutag excellent

relationship with big and reputation. theirs, focus customers we've as business, they known mean, course, a the the long KCA, performance be the some happy they've Of and had I've and actually known, more that had are the I've I've safety. with customers the conversations of couldn't in as I of great on been and always

culturally. like was felt They agreed some great there They overlap.

service have driver positive doing that and ways on of of we is terms better, provide and they customers, for at looking focus the KCA's that also and technology to the both in reception a H&P. differently big very early is which a from coming customers business the So

forward. we really I opportunity the and positive there's So integration move this, great aspect as I and think think a a there's through to

said I've previously, think, I just to difference a processes but those and people. are are also As getting maker. And assets, some these people, amazing going be really we're great

really The and feel going is I I are So good about it. together very be combined to the brands brand think strong, powerful.

Operator

TD from next our take Cowen. we'll And Marc question Bianchi,

Marc Bianchi

keeping this for our us on morning. Thanks toes

John Lindsay

goal. so was Yes. we our goal. That that some thought our early, been of We've pass was we That around. would pretty up

Marc Bianchi

accomplished. Mission

also there I some then is it some assets, as kind related leader that the at North if that difference? historically, fleet you've would there KCA assets the in market look here. got it's leading-edge multiples, I'm asset kind that and to like, look suspect reason just Or I their here? in it, at is the The with if Maybe not multiple missing just or on was explains rigs quite that in at there's something to And high-end H&P looks the drive I versus slide the what on there. And first about AC I one leader And asset not look quality familiar those America. at of is higher of but stuff KCA, of the necessarily. the something others in X.Xx maybe at quality

John Lindsay

going assets think I'll But that they that really back the quality. I just to fleet the like the We have. let last hit Mark point. and asset

more I is they important drilling. think even conventional And like the the mostly that really fleet customers it's have.

course, as Of H&P, years XX the mostly U.S. particularly unconventional. last what well done, been at the we've in

so business have U.S. conventional, they're been work the the lot in in they of rigs years like and over a of the majority is more the have there assets. But those upgrades the just conventional investments But

about. really feel we're anything to about fleet. the fleet multiple talking the the we I that good think So don't variances do with has

Mark Smith

with agree I would John. totally that,

If rigs you countries per the it's looked asset of think EBITDA attractive XX-plus pretty a at percent the East, took I from the core the and in value. approximately active Middle

perspective, from maintained. And very comfortable, maintenance we are assets KCA Marc, with the well a got Deutag

to a quite visits. of site I and As a spend with see we said, time able few this, lot we're

realize the equipment level not that level you well with equipment -- the that of performance couldn't not achieving are maintained. You was they could of of performance realize

We considered have that. certainly

I would acquiring acquisition, just assets. with it's than more say, And this

this rigs challenging, and said, in replicate transformative people one. that long operations the has any a are I acquiring said, in the East will only to as benefit us term. that running in these John transactional immediate not of Middle would, the but it's that gained countries core opportunity like way As organically, sort from other We scale be

John Lindsay

with industry. relationships has, have very we that And my important they a a in with customers very, relationships, very footprint. good And is relationships. much that's that service have KCA experience larger And great they the obviously have interaction again,

very And about again, that. so feel good we

Marc Bianchi

Okay.

capital was -- one the on I the intensity of business of kind The business. of had KCA the other

of XX of million assuming recurring tenders cash what million presume $XXX number happens and of plus I'm number in the about So with XX. be company, combined I basis, this XXXX. like, that know or $XXX the is factor we bottom is H&P's range. should I in generation CapEx there's for you're thinking a, guess Saudi. what But Slide at is what's looks the here? swing reflected the on in here CapEx kind what's looking that that I a KCA

Dave Wilson

Dave. is this Marc,

operate we're companies. think as to X going separate I

we out I H&P website. budget, some of will XXXX with available CapEx point that fiscal on to publicly the come you would when So our information kind their be of only.

run the million. rate March KCA for think Deutag CapEx was through about for $XX I

I year million. last about $XXX think was XXXX

of for So of CapEx. kind they're rate what that their and idea you of kind seeing run gives an

Mark Smith

rig number add Yes. Marc. just to that, our per to that -- I'll add active CapEx maintenance to their pretty just per similar is annum own,

for the questions. thanks So

Operator

have time, I for or the And John turn additional to further now no call at we time over closing back this questions. remarks. any for will

John Lindsay

you focus, thank -- as in continue joining strive it culture. again going as always a is customer-centric approach company execute a to customer-centric ingrained notice. is a short to and our for on has, which The really safety to using company Well, us

and looking future value going this opportunity much very shareholders very for are the forward. Deutag. with our We excited we KCA the joining and create forward forces can We're that about to about

most off, And know sign had we to call with farewell accomplishments of has before you then that I a case company. for and wanted this, don't. mention, is our Mark finally, appreciation And probably This out to but Mark. I the just wanted you in

going joined delivering with last H&P, team, lot little a we've company-wide miss So to X financial together. acumen you. financial over call years value to H&P. you accomplished the strong together A drive ago, purpose for And started earnings We're whole a of build shareholders. journey this to we and

next ethics, H&P, retirement. been to and at a the everyone work your your friendship, Angela best experience. you Success humor in we wish fantastic Take we chapter. and appreciate speaking all And And want care. your deep in It's industry and for financial knowledge.

Operator

concludes participation. And your for today's you conference. this We thank

time. at any may disconnect You

Helmerich & Payne (HP) 25 Jul 242024 Q3 Earnings call transcript